ACE sees net income in 2015 Q3 drop 32.7% from 2014 Q3, record P&C underwriting income

ACE Limited reported Tuesday its net income for the third quarter of 2015 was US$528 million, down 32.7% from the US$785 million in the same quarter of 2014.

Operating net income, net of tax, showed a slight increase, reaching a record US$897 million in the quarter ended September 30, 2015 compared to US$891 million for 2014 Q3, notes a statement from the company.

ACE reports that unfavourable foreign currency movement negatively impacted operating income by US$36 million and reduced Global P&C net premiums written growth by US$240 million.

Looking specifically at ACE’s property and casualty business, the company reports that net premiums written were US$4,217 million in the third quarter of 2015, down slightly from US$4,232 million in the third quarter of 2014.

Underwriting income, however, increased 1.9% to a record US$597 million in 2015 Q3 compared to US$586 million in 2014 Q3.

Improvements were seen in P&C’s combined ratio – which went from 86.3% in the third quarter of 2014 to 85.9% in the third quarter of 2015 – and in P&C’s current accident year combined ratio excluding catastrophe, which was 89.8% in 2014 Q3 compared to 89.2% in 2015 Q3.

Current accident year underwriting income excluding catastrophe losses also improved, increasing 4.5% to US$459 million in the third quarter of 2015 from US$440 million in the third quarter of 2014.

“ACE had a great quarter,” says Evan G. Greenberg (pictured left), chairman and chief executive officer of ACE Limited. “Volatility in the credit, equity and foreign exchange markets impacted our results, but did not prevent us from producing record earnings, record underwriting results and good revenue growth in constant dollars,” Greenberg notes in the statement.

“We benefited from very strong current underwriting year results, positive development in our reserves and relatively low catastrophe losses,” he adds.

Looking at the first nine months of the year, ACE reports that net income was down 6.4% from US$2,298 million in 2014 to US$2,151 million. There was less of a drop in operating income, net of tax, which was US$2,430 million in 2015 Q3 compared US$2,493 million in 2014 Q3.

For the P&C business, the combined ratio for the nine months ended September 30, 2015 was 87.2% versus 87.5% prior year.

“Year to date, even with foreign exchange headwinds, we’ve produced over US$2.4 billion in operating income, which is essentially flat with prior year,” Greenberg says.

Looking at North American P&C for the third quarter of 2015, net premiums written increased 11.0%, the combined ratio was 90.5% compared with 91.4%, and the current accident year combined ratio excluding catastrophe losses for the quarter was 86.3% compared to 88.5%, the company statement adds.

Noting that the acquisition of Chubb is on track to close during the first quarter of 2016, ACE reports integration planning is proceeding well.